In his Wash Post column yesterday, George Will asks whether the massive government intervention in Chrysler's meltdown (and the ongoing presence in GM's failure) is legal:
As the court said in its order permitting completion of Chrysler's bankruptcy, its refusal to review what lower courts have authorized "is not a decision on the underlying legal issues" and pertains to "this case alone."
That matters because the more complex and consequential General Motors bankruptcy is not completed, and as a consultant said in an e-mail to Chrysler's then-chief executive, Chrysler was a "guinea pig" on which the government tested what it can get away with in GM's bankruptcy, which involves the same issues: Is it lawful to use Troubled Assets Relief Program (TARP) funds for this? Does the mistreatment of Chrysler's secured creditors constitute an unconstitutional taking of property?
Will cites Reason's own Jacob Sullum in the column, who was the first (and remains the most vociferous) in pointing out the uncomfortable and irrefutable fact that the feds' moves are simply not legal via the legislation used to authorize them:
Although he ran on a promise to respect the legislative branch's constitutional role, Barack Obama applauded the Bush administration's illegal loans, and since taking office he has not sought congressional approval for a bailout that is still operating outside the law. President Obama's high-handed engineering of the pending merger between Chrysler and Fiat, a deal that flouts well-established bankruptcy principles, confirms he is no more committed to the rule of law in this area than his predecessor.
The Obama administration continues to subsidize Chrysler and G.M. (and even the companies that sell them parts) with money that Congress allocated to the Troubled Asset Relief Program (TARP). As the name suggests, the Treasury Department was supposed to use that money to buy troubled assets from financial institutions, the aim being "to restore liquidity and stability to the financial system." There is not a word in the Emergency Economic Stabilization Act, the law that created TARP, about automobile manufacturers.